Thursday, December 24, 2009

The U.S. Treasury Department received $45 billion in repayments on its TARP investments in Wells Fargo and Citigroup bringing the total amount of repaid TARP funds to $164 billion.

Wells Fargo repaid $25 billion under the Capital Purchase Program and Citigroup repaid $20 billion under the Targeted Investment Program, both of which will wind down at the end of this year. Treasury now estimates that total bank repayments should exceed $175 billion by the end of 2010, cutting total taxpayer exposure to the banks by three-quarters.

In addition, Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation and Citigroup terminated the agreement under which the U.S. government agreed to share losses on a pool of originally $300 billion of Citigroup assets. This arrangement was entered into in January and was originally expected to last for 10 years. The U.S. government parties did not pay any losses under the agreement and will keep $5.2 billion of $7 billion in trust preferred securities as well as warrants for common shares that were issued by Citigroup as consideration for such guarantee. With this termination, the AGP is being terminated at a profit to the taxpayer.

Treasury currently estimates that TARP programs aimed at stabilizing the banking system will earn a profit thanks to dividends, interest, early repayments, and the sale of warrants. Total bank investments of $245 billion in fiscal year 2009 that were initially projected to cost $76 billion are now expected to return a profit. Taxpayers have already received over $16 billion in profits from all TARP programs and that profit could be considerably higher as Treasury sells additional warrants in the weeks ahead, the department says.